S'pore-Event-Driven-pick | China Aviation Oil (CAO SP SP) Px/Tgt SGD1.35/1.90
1. UOBKH has been having CONVICTION CALLS on CAO SP as follows:
a. Put-on-BUY-radar: End-Oct 2016 <sgd1.30 (prefer to enter nearer sgd1.20)
b. Take-Profit: End-Aug 2016 sgd 1.50
c. Conviction Buy: End-May 2016 sgd 0.99
2. UOBKH has CAO SP at our Asia Gems Conference & the event-catalyst are as follows:
a. Nov 2016: 3Q16 results likely to outperform even the more bullish consensus forecast
b. Early 2017: UOBKH SGD1.90 target is at 2017 PE of 14x (vs peers at 18x)
c. Early 2017: Possible utilisation of its USD220m cash for M&A (likely to take a stake in a European airport & do a similiar ops as Shanghai Pudong)
3. UOBKH research is still bullish & calls a BUY on CAO SP with target of sgd1.90. Once again, readings from China's Golden Week holidays show that international travel and traffic in Shanghai PuDong airport remained robust. CAO's management also shared the same optimism, indicating a bullish 2H16 outlook. Therefore, we reiterate our confidence that its upcoming 3Q16 results will be stellar and the company is on track to deliver record profits for 2016.
UOB Kay Hian Research issued a report dated 13/10/16 on China Aviation Oil. Please contact us for the full research analyst report.
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